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Armenia: Armenian railway under anti-trust investigation

November 2008.

A state regulatory body said on Wednesday that it is looking into the legality of a recent sharp increase in the cost of cargo shipments and other services provided by Armenia’s Russian-managed rail network, Armenialiberty reported.

The new tariffs took effect on July 1 and immediately prompted complaints from local companies involved in export and import operations. One company, which manufactures and exports chemical liquids, appealed to the State Commission on the Protection of Economic Competition late last month, accusing the rail network, recently renamed as the South Caucasus Railway (SCR), of abusing its monopoly on cargo transport by rail. The Tariel and Sons company said the measure forced it to suspend operations.

According to a commission spokeswoman, Armine Udumian, a similar complaint was also lodged by the Flash company, one of Armenia’s largest importers of gasoline and diesel fuel. She said the company not only protested against the new tariffs but also alleged unjustified delays in shipments of its rail cars carrying fuel.

Udumian told RFE/RL that the investigation was formally launched three weeks ago. Under Armenian law, it has to be completed within the next 70 days. The SCR risks heavy fines if found guilty.

The tariff rises were particularly sharp for services provided by the SCR at its railway stations, including the redirection of rail cars on their recipients’ orders.

- We used to pay AMD 2,500-3,000 per rail car for that,- complained Mushegh Elchian, deputy director of Flash. - Now that service costs AMD 18,000.

Elchian said the company repeatedly raised the issue with the SCR before complaining to the anti-trust commission.

The SCR declined to comment on the controversy on Wednesday.

The underused and cash-strapped rail network was placed under the long-term management of Russia’s state-run rail company, RZD, last January following an international tender in which the latter was the only bidder. RZD pledged to invest USD 230m in the network during the first five years of operations and another USD 240m in the following years.

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